Is Build to Rent An Affordable Housing Option?

With the build to rent sector growing significantly with every year, these developments have significant potential to appeal to various different demographics. With so many different options available for tenants, there is truly something for everyone, especially because these developments have been built with the end user in mind – the modern renter.

The housing demand

The number of new homes needed in England is up to an estimated 345,000 per year, and more of an emphasis is being placed on affordability. The housing shortage is changing the mindset of the UK population, with a shift away from home ownership in favour of private sector renting. Especially with the younger generation, where the average age of the first-time home buyer is still increasing, renting is becoming the most viable and affordable option.

As the housing market has changed and there’s a lot more flexibility in the employment market, people don’t want to tie themselves down by purchasing a property, which can be counterproductive in the long run if they want to be flexible with their living situation.  

Is Build to Rent the solution to the affordable housing crisis?

The build to rent market totalled £2.4bn in investment in 2017, providing the UK population with homes that are designed and built specifically for renting. These large-scale developments are beginning to change the housing landscapes of the country’s biggest cities, with scope to move further into the suburban market over the next few years.

One of the historical issues of Build to Rent schemes was persuading investors and policy makers, but its proven success in the market over the last few years has reduced doubts and level of risk. With the market forecasted to grow over the next six years by 180%, the lack of housing in the UK has persuaded investors that there is a strong demand for this sector.

How are Build to Rent developments different?

Traditionally, renting has been seen exclusively as properties owned by buy-to-let landlords. However, build to rent developments are built to suit prospective renter’s lifestyles.

With the added benefits of on-site management and more amenities and facilities, tenants are guaranteed better quality homes and long-term stability, with a single individual or professional company providing reliable management onsite. By not having to pay extra for separate everyday costs, such as gym memberships and bike storage, build to rent developments are seen as more than just a place to live, providing residents with a living experience which is excellent value for money.

Is it deemed as affordable?

In a recent collaborative report from the British Property Federation (BPF), Dataloft, London First and the UKAA, it shows how the build to rent sector is home to a diverse range of residents, debunking the common perception that build to rent schemes are unaffordable.

Typically, the developments are built to target young professionals aged 25-34 who are looking for an urban working living space. However, as the sector is continuing to grow, investors are looking to diversify and grow their exposure and enter the suburban build to rent market; following the proven success of city centre multifamily schemes. This new wave in of capital is going to make the benefits of purpose-built rental housing more obtainable to other demographics, including young families, who need practical and affordable housing options in less urban locations.

The Office for National Statistics consider an area to have affordable private rent if renters spend up to 30% of their income on housing. With this affordability benchmark in mind, the collaborative report shows that build to rent is considered an affordable option for all residents. Couples, sharers, single individuals as well as families spend an average of 30% on housing, with the added amenities such as gyms, lounges and co-working spaces included in the cost.

Our Head of Build to Rent, Jodie Wardell, also believes that these schemes can be a very affordable option for tenants:

“BTR offers something for every type of tenant, there are numerous offerings across the sector with varying rents to reflect the level of amenities.

Larger scale developments with amazing amenities can certainly be the more expensive option however, there is evidence to suggest that tenants get much better value for money.

You could also argue that the ability to include a gym membership, flexible workspace, dry cleaning, and dog walking - as a few examples - in your rent can be more economical than managing various additional subscriptions.

If amenity and community living isn’t high on a prospective tenant wish list, there are plenty of other options available that provide the traditional PRS offering.”

Conclusion

Build to rent is providing a high value for money living option for residents across the country. As the sector continues to evolve, these professionally managed properties are going to adapt to changing priorities and provide positive, affordable, renting experiences.